Stamp Duty Changes

Stamp duty is an ancient tax payable on the most land or property transactions and is the biggest tax UK homebuyers face.

In his Autumn Statement, Chancellor George Osborne announced changes to Stamp Duty Land Tax (SDLT) which would benefit an estimated 98% of homebuyers, but how will they work?

The new changes, which took effect back in December, replaced existing rules which meant that when a property was purchased the buyer had to pay a fixed percentage on the purchase price. Ultimately, the more you paid for a property, the more tax you had to pay.

The system was heavily criticised as properties were divided up into strict bands, previously charged according to the scale below:

Up to £125,000 – 0%

£125,001 – £250,000 – 1%

£250,001 – £500,000 – 3%

£500,001 – £1 million – 4%

Over £1 million – £2 million – 5%

Over £2 million – 7%

This meant that if a property sold for £1 more than the limit of the band threshold, the owner would see a substantial increase in the amount of stamp duty payable. For example, at £250,000, a buyer would pay £2,500, but on a house worth £250,001, they would pay £7,503.

The reform means that buyers are now charged at only a proportion of the purchase price that falls within each stamp duty band.

Anyone buying a property for more than £937,500 will pay more stamp duty under the new rules, while anyone purchasing under that price will pay less or the same as they would under the old regime.

The new rates are as follows:

Up to £125,000 – 0%

£125,001 -£250,000 – 2%

£250,001 – £925,000 – 5%

£952,001 – £1.5m -10%

Over £1.5m – 12%

The changes will provide a huge boost for first-time buyers, helping them to take a first step onto the property ladder.

For friendly and down to earth advice on stamp duty and any part of the conveyancing process, get in touch with a member of the Peter Robinson & Co. team today.